A man walks into a branch of Bank of America in New York.
Scott Mlyn | CNBC
Mortgage rates rose again last week, throwing even more cold water on demand from current homeowners and potential buyers. Weekly claim volume fell 0.1% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contractual interest rate for 30-year fixed rate mortgages with conforming loan balances ($647,200 or less) fell from 7.06% to 7.14%, with points rising from 0, 73 to 0.77 (including origination fees) for loans with a 20% decline. Payment.
“Mortgage rates rose slightly last week after the announcement that the Federal Reserve will continue to raise short-term rates to combat high inflation. The 30-year fixed rate remained above 7% for the third week in a row, with increases for most types of loans,” said MBA deputy chief economist Joel Kan.
Refinancing demand, which was positively crushed by the sharp rise in interest rates, fell another 4% on the week and 87% compared to the same week a year ago. Mortgage rates started this year around 3%, so there are very few borrowers left who could benefit from refinancing at today’s higher rates. Refinance demand is now at its lowest in 22 years.
Mortgage applications for the purchase of a home rose 1% for the week. Although not a major change, it was the first increase in six weeks. Buying demand, however, is still down 41% from a year ago and near a seven-year low.
The share of activity for adjustable rate mortgages (ARMs) increased to 12% of all applications. ARMs offer lower interest rates, and although they are considered riskier loans, their rates can be fixed for up to 10 years.
Mortgage rates started moving sideways this week, but that could change on Thursday as investors await the October reading of the government’s consumer price index.